Yet another sign that cryptocurrency has become a global force to be acknowledged: the G-20 put international cryptocurrency regulation on its agenda during its meeting in Buenos Aires a few weeks ago, aiming to “regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF [Financial Action Task Force] standards.”
Part and parcel of the G-20’s commitment to cryptocurrency reform is its attention paid to cross-border crypto taxation. The summit called for a “globally fair, sustainable and modern international tax system” with regards to digital currencies.
International treaties and transfer pricing can be intricate under the most straightforward cross-border trading partnerships. Yet these agreements were crafted with only traditional, fiat currencies in consideration. How does such a framework take shape when cryptocurrencies are involved — that is, a storage of value that was developed largely in part to eliminate the need for cross-border foreign-exchange?
“…not all countries treat the underlying digital representation the same way, much less the taxation of that digital item. For example, two countries may use a treaty to agree on how a dividend should be taxed, but they start from a place where both countries agree what a dividend is. With cryptocurrencies, there is likely a need to first resolve how a token should be treated (e.g. security vs. utility vs. other) and then, resolve how to tax that item.”
To learn more about cross-border cryptocurrency taxation, see the full article on ITR.